BNSF Announces First Mileage-Based
Fuel Surcharge Program in the Rail Industry

Effective January 1, 2006 , BNSF will replace its current fuel surcharge methodology--based on a percentage of a customer's freight transportation bill--with a mileage-based methodology based on fuel intensity. This mileage-based fuel surcharge will be the first in the railroad industry.

In this era of tight transportation capacity, rapidly rising fuel prices and fuel-price volatility, we believe a mileage-based fuel surcharge program is the most direct and accurate method of reflecting the impact of fuel price changes on BNSF and our customers.

The mileage-based fuel surcharge will apply to movements that originate and terminate on BNSF, and to the BNSF portion of Rule 11 shipments--a type of interline shipment where each carrier bills the customer separately for their services. The mileage surcharge also will apply to certain movements involving BNSF and one or more short lines. Joint-rate interline movements with other Class I railroads will continue to be covered by BNSF's existing percentage fuel surcharge due to current interline billing systems and practices.

Mileage Calculations and Surcharge Tables
Mileage calculations will be based on the Household Goods Carriers' (HHG) Mileage Guide (Rand McNally), and the surcharge tables will reflect the fuel use intensity of four types of rail movements: coal and taconite; carload and agricultural products; intermodal trailers; and intermodal doublestack containers. The surcharge tables will be based on the On-Highway Retail Diesel Fuel (HDF) prices published by the Energy Information Administration of the U.S. Department of Energy.

Implementation Date
We will be working through a number of implementation issues in coming months. The effective date was set to January 1, 2006, to allow customers and BNSF adequate time to implement and test systems changes, since the change will require significant modifications to BNSF's computer systems and to some customers' systems.

Our goal is to implement a straightforward fuel surcharge program that can be administered without disrupting existing agreements and relationships. We will provide fuel intensity formulas and further details as they become available.